Telstra shares nudge $5 as the chase for yield continues
The stock is one of the best-performing blue chips on the ASX so far this year.
Its shares have risen 11 per cent since the Coalition announced its plan to build a cheaper version of the national broadband network. Most importantly for investors, the Coalition promised that Telstra would still be in line for receiving an $11 billion windfall for disconnecting its copper network.
Telstra's performance looks even stronger over nearly two years. Its shares hit a low of $2.56 in mid-November 2010, but closed at $4.98 on Tuesday - an increase of 94 per cent for those who caught the stock at the bottom.
The rise comes as Telstra is expected to unveil its 4G subscribers number on Wednesday. In a flat mobile market, Telstra is the only carrier making headway in signing up new subscribers.
Investors are flocking to Telstra shares as a safe haven, given recent volatility in equity markets and especially after the collapse in gold prices. Shareholders are attracted to Telstra's steady flow of dividends, now at 28¢ a share.
UBS has questioned whether the shares can increase further.
"We believe further share price appreciation is limited. A more rational pricing environment, market share momentum, cost out and 4G upside are now priced in," analyst Richard Eary said.
Telstra is outpacing rivals in rolling out the superfast 4G network across the country. That network is expected to cover 66 per cent of the population by next month.
The first-mover advantage in the 4G market is positioning Telstra to take advantage of the expected explosion in data traffic.
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Telstra's share price rose sharply and closed at $4.98 on Tuesday, finishing just shy of the $5 barrier — its highest level in almost eight years. The stock has been one of the best-performing blue chips on the ASX so far this year.
Telstra shares have risen about 11% since the Coalition announced plans to build a cheaper version of the national broadband network (NBN). The policy also included a promise that Telstra would still be eligible for an $11 billion payment for disconnecting its copper network, which helped lift the stock.
Over nearly two years Telstra has delivered strong gains: shares hit a low of $2.56 in mid-November 2010 and closed at $4.98 on Tuesday, an increase of roughly 94% for investors who bought at the bottom.
The article notes Telstra pays a steady dividend of 28¢ a share. Investors have been attracted to those reliable dividend payments, treating the stock as a safe haven amid recent equity volatility and the collapse in gold prices.
UBS questioned further upside, with analyst Richard Eary saying additional share-price appreciation is likely limited because a more rational pricing environment, market share momentum, cost reductions and 4G upside are now priced in.
Telstra is outpacing rivals in rolling out its superfast 4G network and is the only carrier making headway signing up new subscribers in an otherwise flat mobile market. The company was expected to unveil its 4G subscriber numbers, and the 4G network is forecast to cover about 66% of the population by next month.
According to the article, Telstra's first-mover advantage in 4G positions it to benefit from an expected explosion in data traffic, potentially supporting subscriber growth and usage-driven revenue gains.
Everyday investors have been buying Telstra as a defensive option amid recent stock-market volatility and the sharp fall in gold prices. The company’s steady dividend stream (28¢ a share) and strong 4G rollout have made it an attractive, lower-volatility blue-chip holding.
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